Ternium S.A.

Good morning, ladies and gentlemen, and thank you for standing by. My name is Kelvin, and I will be your conference operator today. At this time, I would like to welcome everyone to Turnium's third quarter 2025 results call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star 1 again. Thank you. I would now like to turn the call over to Sebastian Marti. Please go ahead.

Good morning, and thank you for joining us. My name is Sebastian Marti, and I am a Global IR and Compliance Senior Director. Yesterday, we announced our financial results for the third quarter and first nine months of 2025. This call is meant to provide additional context to that presentation. I'm joined today by Maximo Bedoya, Turing's Chief Executive Officer, and Pablo Maurizio, the company's Chief Financial Officer, who will discuss Turing's business environment and performance. After our prepared remarks, we will open up the floor to your questions. Before we begin, I would like to remind you that this conference call contains forward-looking information and that actual results may vary from those expressed or implied. Factors that could affect results are contained in our findings with the Securities and Exchange Commission, and on page two in today's webcast presentation. You will also find any reference to non-IFRS financial measures reconciled to the most directly comparable IFRS measures in the press release issued yesterday. With that, I'll turn the call over to Mr. Bedoya.

Thank you, Sebastian. Good morning, and thank you all for joining our quarterly conference call. In the third quarter of the year, Ternium continued to improve its performance. We saw an increase in EBITDA driven mainly by a decrease in cost per ton supported by the continued execution of Ternium's Competitiveness Plan. Our cash generation remains strong, with operation operating activities contributing over half a billion dollars during the quarter. Additionally, Tarnium's board of directors declared an entering dividend of $0.90 per ADS, which keeps the payment level the same as last year. Meanwhile, the business environment continues to be marked by uncertainty, largely resulting from the ongoing changes in the U.S. tariff framework. Within this environment, the U.S.-Mexico trade agreement stamped out as particularly significant for our business. In recent weeks, we have engaged in dialogue with stakeholders on both sides of the border. This conversation has revealed support for policies that strengthen the USMCA framework and promote deeper regional integration. The Fortress North America concept is gaining traction, highlighting the importance of deeper economic and industrial ties among the USMCA members. As trade negotiations progress, the focus remains on maintaining fair competition, addressing imbalances, and reinforcing rule of orders, all of which are important to ensure the long-term resilience and growth of the industry in the region. Along these lines, the first formal steps have already been taken for the PlanetUSMCA review, which consultations launched to obtain feedback on the agreement from interest parties. In Mexico, a certain result from US trade policies has had a significant impact on steel demand during 2025, recognizing the challenges created by this period of trade volatility The Mexican government is prioritizing efforts to fortify the country's value chain, aiming to promote greater self-sufficiency and resilience against external competitive pressures. These incentives are closely aligned with U.S. priorities. Throughout 2025, the Mexican government has taken a proactive stand by launching initiatives such as the Plan Mexico. implementing targeted measures to counter unfair competition from certain Asian countries and imposing tariff on imports from nation without a trade agreement with Mexico. For example, in September, a proposal was published to increase tariff on close to 1,500 categories, including steel and its derivatives, for imports originating from countries without a trade agreement. It is expected that tariff on steel currently at 25%, and its product, auto parts, engines, and appearance will rise to 35%. In the case of light vehicles, the tariff is expected to increase to 50% versus the current 20%. A ruling is expected in November following the approval of the final proposal for the tariff increase. These efforts are primarily aimed at increasing local value adding, promoting more resilient North America supply chains, and reducing reliance on imports from Asia. We strongly support these policies and they are vital for the region's economic development and for the continuous growth of the steel industry. In Brazil, industrial activity continues to expand even in the face of high interest rates. The overall steel environment remains healthy with expectation of 5% growth in apparent steel demand in 2025. In addition, our ongoing efforts to increase the efficiency of our operations in the country are yielding positive results, with continued decrease in cost per ton. But still, the Brazilian market continues to face a high level of unfairly trade imports, primarily from China. In the first nine months of 2025, imports of finished steel products rose by 33% in Brazil, as excess production from China flows to international markets. Unlike the United States, Europe, or Mexico, Brazil still lacks effective trade defense mechanisms. It is crucial that ongoing anti-dumping investigations conclude with the imposition of duty, whether preliminary or final, on the relevant products under review to address these challenges and defend the domestic industry. Turning to Argentina, after a period of growth, activity across the steel value chain leveled off due to increased uncertainty leading up to the midterm elections. Now that the elections are behind us, I am optimistic that Argentina may be entering a period of structural reforms, paving the way for significant growth opportunities across steel value chains. This is especially true in the country's most dynamic sectors, like agriculture, mining, and oil and gas. Before moving on, I am pleased to share that this quarter we received the Steely Award for Excellence in Sustainability from the World Steel Association. This award recognizes Sternium's Wind of Change project, our first renewable energy initiative in Argentina. The wind farm now provides approximately 90% of our externally sourced electricity in the country. significantly reducing our environmental footprint and delivering considerable cost savings. To sum up, the U.S. transformation of the global trade framework has brought significant challenges, but these adjustments are necessary in light of aggressive trade practice by China and other Asian countries. To mitigate the evolving global trade environment, We are focused on strengthening our market position through ongoing optimization and cost reductions. This effort ensures termites remain resilient, efficient, and able to deliver sustainable value to stakeholders while adapting to change and pursuing growth. Thank you very much for your continued support.

Okay. Thanks, Maximo, and thank you everybody for sharing today's discussion with us. Let me review our operational and financial performance following the webcast presentation. Beginning on page three, adjusted EBITDA increased sequentially in the third quarter, driven by improved margins. Looking ahead, we expect a slight decline in adjusted EBITDA for the fourth quarter, primary driven by the usual seasonal down in shipment across all our markets. Adjusted VDA margin should remain consistent with the previous quarter. As the expected decrease in revenue per ton in Mexico and Argentina is projected to be largely offset by continued reduction in cost per ton. Let's move on to the next slide. Our net result for the third quarter of 2025 was a loss of 270 million. This figure reflects, thirdly, the 405 million non-cash laws related to the write-down of deferred tax assets at Yusiminas. And secondly, 32 million laws related to the quarterly update of the value of a provision for ongoing litigation concerning our position of stake in Yusiminas. This was driven by interest accrual and by the appreciation of the Brazilian real in the quarter. Without this effect, Net income would have been $167 million in the first quarter. And earnings for ADS would have been 73 cents. You can also see that compared to the second quarter of 2025, the largest impact was related to the write-down of deferred tax at UC Minas. and also to a 143 million decrease in income tax results. Mainly due to lower deferred tax results in the third quarter, there was significant gain in the second quarter driven by the appreciation of the Mexican peso against the U.S. dollar. Let's move to page five to review our steel segment performance. Shipments posted the most increase during the quarter, driven by growth in Mexico and Brazil. This was partially upset by lower volumes in other markets and somewhat in the southern region. In other markets, weaker shipments to the US were partially upset by higher volume in other destinations. Looking forward to the fourth quarter of 2025, the company anticipated a sequential reduction in shipments in Mexico influenced by softer construction activity and the typical year-end seasonality. In Brazil, despite persistent challenges stemming from unfair trade steel imports, particularly from Asian producers, UCMinas continues to enhance in competitiveness through cost-efficiency initiatives and operational improvements. These efforts are expected to result in a more favorable cost per ton compared to the previous quarter. And in Argentina, we are positive about demand growth opportunities throughout the company's value chain. Turning now to page six, Cash operating income in the steel segment continued improving, mainly due to a margin increase. Although there was a slight decrease in revenue per ton, this was more than upset by a lower cost per ton as a result of lower prices for raw materials and purchase slabs, as well as ongoing efficiency improvements. On the following slide, let's review the performance of our mining segment. Net sales declined quarter over quarter, primarily due to slightly lower iron measurements and a decrease in the margin, mostly due to an increase in cost per ton in Las Encinas, one of our Mexican mining operations, as a result of a temporary decrease in production. Looking forward, production levels in Mexico are expected to normalize in the fourth quarter. Let's review now our cash flow and balance sheet performance on page 8. In the third quarter, we had solid operating cash generation, supported by a further reduction in working capital, largely attributable to lower unit cost in tangent inventories. Capital expenditures peaked in the second quarter and totaled 711 in the third quarter, reflecting our ongoing progress in developing new facilities at the Pesquería Industrial Center in Mexico. Net cash position continued to decrease, decreasing in the third quarter, driven by the funding requirements associated with the ongoing expansion, together with the $114 million decrease in the fair value of Argentine securities as of the end of September, which have since then been regained as of yesterday's market prices. Let's now turn to the final slide, where we will summarize our performance for the nine months of the year. As such, the VDAs decreased in the first nine months of the year, mainly due to lower margin and shipments. The margin reduction was primarily driven by lower steel prices partially upset by improved cost performance. We had a robust cash flow operation in the period boost by working capital decrease and capex increase compared to last year, as 2025 is a peak year for the growth project in Pesqueria. As a final remark, Yesterday, our Board of Directors approved an interim dividend of $0.90 per ADS unchanged from last year interim dividend. Together with the $1.80 per ADS paid in May, this brings the total distribution during 2025 to $2.70 per ADS, equivalent to dividend yield of 7%. This interim dividend will be paid on November 11. With this, I'm concluding my prepared remarks. We are now ready to take any questions that you may have. Operator, please open the floor for the Q&A session.

Ladies and gentlemen, we will now begin the question and answer session. I would like to remind everyone to ask a question, please press the star button followed by the number one on your telephone keypad. If you would like to withdraw your question, please press star one again. One moment please for your first question. Your first question comes from the line of Carlos de Alba of Morgan Stanley. Please go ahead.

Good morning, Maximo and Pablo. Thank you for the opportunity. My two questions. One is, given the results of the midterm elections in Argentina, what sort of strategic opportunities do you see in trying to make more efficient the ownership, a structure of the company, uh, you with potential stakes in, uh, see that at, or turning Argentina, Antonio, Mexico.

Yes. Good morning, Carlos. Um, I mean, I think the election doesn't, doesn't change the, the, the project that, that we, what you have, you remember that we. We have an opportunity to know. We analyze, simplify the structure. It couldn't be done. We are not seeking that right now. But the things that can come online, but not because of the election. I think that the change in the election is that, well, we are going to left behind the noise of everything that will happen in the market in Argentina. I think with this election... There are going to come structural reforms in Argentina that probably will make more competitive the industry. I mean, Argentina is in need of these reforms, and I think we can see in the future a growth in the market, but also a growth in the competitiveness of Peri-Margentina, which is what we need in Argentina. I think those are the changes of the elections.

And then under what circumstances would you try that initiative that you presented in the past that didn't work to make the structure more efficient?

I think it doesn't depend on us. Remember that a good part of the share of TAB in Argentina is in the ANSES. So it doesn't depend on us to do that. I don't know, Pablo, if you want to add anything else to that.

Hi, Carlos. You know that, as Maximo mentioned, we have tried in the past doing that. It's also, as he mentioned, nothing that we can do at this moment. But this is a project that continues to be in our mind. So if there is, in the future, an opportunity to move forward with this, it's something that we will take. in consideration, it will require full analysis on the process, on the project, but it's clearly something that we may consider. I think that, first of all, you need to see, in order to start thinking about this kind of project, the reforms that the government will try to pass, how these are evolving, how are these evolving, and the way they are approved in Congress, So with all of that behind us, probably opportunities could appear to further analyze this project. So again, a lot of things moving on in Argentina. We need to see if this evolution is going on the positive direction. And probably after that, there will be a possibility to further analyze this project.

All right. Great. Thank you. And then my second question is related to I know that you guys are talking to the government in Mexico and in the U.S. The Mexican government is still negotiating with the U.S. government. But what would be terms planned or action planned if the U.S. keeps the melt and pour conditions for still using products that are imported into the U.S.?

Well, we are going to continue with the plan we already put forward. The new investment was exactly because of this. Remember, we have 2.5 million tons of flat products, not including long products there, of melt and pour. And with the new steel shop, we were going to have 2.6 additional to that. So we are investing because I think that a melt and pour, in some cases, as in the automotive industry, is something that is going to stay. or it can be increased. So that's why we made those huge investments, Carlos.

All right. I understood that right now it has to be melt and pour in the U.S., not in Mexico. Ah, sorry. Well, yeah, you're right about that.

That is not to pay... You're right. I misunderstand the question. I thought you were talking about the USMCA. I mean, the negotiation or looking forward, that... If we are going to have a USMCA, that has to change. The vision of the path we see is that it has to be melt and pour in the region. It cannot be melt and pour only in the US if we have to have a negotiation. You cannot have an agreement where you only have US melt and pour. Got it. Okay. In the meantime, there are some customers of us probably your question also goes through that. There are some customers of us that are, um, how you said are, um, well, some, uh, um, I don't know, some affections because of it, because they are some still derivative products. Are you said that either melt and pool in the U S they have these counting in the tally they pay. Well, we are working with each of these customers for each of these products in particular to support their sales so that we don't lose any volume. But this is a temporary thing, I guess. Excellent. Thank you very much, Maximo and Pablo. Thank you to you, Carlos. You're welcome.

Your next question comes from the line of Rich Emerson of Goldman Sachs. Please go ahead.

Hello, guys. Can you hear me? Yes, Rich. Okay. Good morning. Thank you, everyone. I have two questions. The first one looking for QOutlook. I'd like to understand a little bit more on first the cash cost outlook. You guys mentioned that there are ongoing efficiencies in the operation. But could you please just break this down between uh the cash cost performance at the us and at mexico and argentina so looking ahead you guys expect cost to improve also in the operations uh in mexico and argentina so this is the first one uh and the second one in terms of prices i understand that uh mexico is undergoing a subdued activity in the construction segment, and prices in Argentina continue to be subdued as well. So what can you guys share in terms of what can you expect on prices for Argentina and Mexico going forward? So this is the second point on the first question. And just another point on CapEx. In this quarter, there was a small decline, so just trying to understand if you guys still plan to reach the $2.5 billion for this year, or indeed we should see lower capex for the year, considering that we saw this decline in Turkey. That's it. Thank you.

Thank you, Rich. I start from the third one and going up. CapEx. Yeah, we had said that second Q was the highest of our topics. It was around 800 billion. This quarter is 7 million. Probably in the fourth quarter, the number we are seeing is around 600 million, putting the total CapEx of the year between 2.5 and 2.6 billion. For 2026, CAPEX will be probably $1.9 billion. So probably every quarter will be around $500 million. And in the 2027, probably will return to $1.11 billion. So as I said before, the peak of all this CAPEX investment, of all this CAPEX plan, was in the second quarter. I hope I answered the third one with that. Second, you're talking about prices. Prices for the fourth quarter are going to have a little bit of a decrease in Mexico and Argentina, but only slightly, and some part of that is because of the mix. Remember, a fourth quarter is usually a low-volume quarter, and also the mix changes a little bit. So prices... when you see our prices in the fourth quarter could be a little bit low, but not very much. Prices in the North American region are stable, and prices in Mexico have decoupled a little bit from the U.S., but we are not seeing any decrease and probably are going to start seeing some increases in some of the sectors in Mexico late in the fourth quarter or early in the first quarter. And the first one, Pablo?

Yeah, perfect. Let me try to answer your question by dividing the cash costs from the different operations. But before doing that, in a general view, you have seen that our margin during the third quarter has increased in comparison to the third. That was somewhat expected and something that we announced during our last conference call. And this was due to Two different things. First of all, of course, there was a reduction in raw material and purchased labs, which are very important for our cost structure. But also, there was the implementation of our cost reduction plans that is expected to be fully implemented by the end of this year. So, this is the two components of why we have been reducing costs. And if you split up between the different markets where we are, you have an increase of margins in Argentina, somewhat in Mexico, and in Brazil, taking into consideration numbers that Yusimin has presented to the market last week, you have seen also some increase in margins. The expectation for the fourth quarter is to further increase our cost reduction, and if all other things were equal, our margin should increase. But we know, and we have said, and Maximo has just answered one question to you, where you will see that our average price, both in the Mexican and the Argentine market, will decline a little bit, but we will be able to sustain our margins in the different markets. That's why the outlook for the fourth quarter is for sustaining the BDA margin and a small reduction in volumes, and that's where we will see our immediate generation. But all in all, we continue, and we're expecting to continue to have better margins in the different regions where we operate, and that will be clearly reflected in the cash costs.

All right. Very clear. Thank you very much.

You're very welcome.

Your next question comes from the line of Alfonso Salazar of Scotiabank. Please go ahead.

Thank you and good day, everyone. I have two questions. The first one is regarding the outlook for the month in Mexico for 2026. I mean, we know that 2025 was, I believe, weak. And if you think that there's going to be a recovery in 2026, I would like to know what's going to drive that recovery. And more generally, what is your outlook in the view for North America? We know that the situation with tariffs now with Canada, an extra 10%, it's very unclear what's going to happen with tariffs the next week and then one month from now. But if you can help us to understand first how the U.S. has been sourcing all the steel that they need this year so far with the tariffs. and how you think it's going to be once the situation normalizes, let's say two years from now, if we can think of a normalization of the steel trade situation that we are facing today. That would be very helpful. Any comments on that would be very helpful. Thank you.

Good morning, Alfonso. I will try to make magic and answer the second question. But first, The outlook of Mexico, yeah, demand in Mexico in 2025 is not good, as you said. Last week, I think the world still disclosed the SRO for the whole world, and apparent consumption in Mexico is probably going to be down 10% in Mexico, still apparent consumption. which is a very, very big number. What we are seeing for 2026 is a recovery in Mexico demand. We'll still put this at 4%, but probably if the infrastructure, I mean, part of that decrease in the apparent consumption in 2025 is due to, well, it's always in a new year from a government, always infrastructure down. infrastructure is down like 28 to 29 percent in the first nine months of the year so that's a huge number and it's still intensive so this is going to grow next year construction will probably start growing again and the stabilization in the trade between the u.s and mexico i think that's something that is also a driver of improving demand or going back to the demand we have in 2024. So in the sense for Mexico, we are optimistic that demand is going to recover at least partially in 2026. Outlook for the North America. You said what is going to happen in two years? Clearly, I mean, today imports in the U.S. are decreasing. There are still some countries that are paying the tariff of 50% and shipping to the US, but in general, uh, inputs are decreasing. I think that, um, at least in the region, I am, um, confident. I don't know if the confidence is the word, but, but I think that USMCA it's going to be renegotiated. I mean, I mean, at least trade. between the USMCA countries is going to be liberalized. I think that the US has a clear vision of that manufacturing industrialization has to come back to the region. And I think that including Mexico and Canada, but I'm speaking about Mexico, in this region of how to improve the industrialization in the region, I think it's a better outlook for everybody. And everybody, I think, has the same vision. When is this going to happen? It's not clear, but the renegotiation, it's already started. So I guess that by the mid part of next year, we are going to have an outlook of where this negotiation goes and how tariffs between the two countries start diminishing. That's at least our vision. I hope that also I give some clarity.

Yeah, maybe just a follow-up on what you mentioned. The fact that we already see some bottlenecks for this, you know, reshoring of manufacturing. One of them is certainly labor. The second one is energy. You know, with data centers consuming so much energy. You know, if you want to make more steel products, used in electric furnaces, that's also going to require a lot of energy.

You're right, Alfonso. That's why I think that a vision of a region more than only the U.S. is what is in the best interest of everybody, including the U.S. I think Mexico can be a partner, if it follows the rule of the USMCA, can be a very, very good partner to... help with the vision the U.S. has. And I think that's a common understanding of everybody.

Well, thank you, Mathieu.

Thank you.

Your next question comes from the line of Alex Hacking of Citi. Please go ahead.

Yeah, thanks. Morning. I guess just following up on the trade point, have any of your auto customers started to rebalance production back to the U.S. and away from Mexico? Thanks. Thank you.

They still didn't rebalance production. Our discussion with our customers are how they, I mean, they are sourcing steel from the U.S., they are sourcing steel from us in Mexico, and they are also sourcing steel from some Asian countries, and we are discussing how to if we are able to source that steel that they are bringing from, let's put, Asian countries back to Mexico. And so we have very good discussions with them trying to make a ramp up of that sourcing. From a broad point of view, I mean, the US consumes somebody around 16 million units in light vehicles per year. They produce to date eight millions and Mexico export 2.5, 2.3, 2.5. I mean, I understand that, uh, what the Trump administration is trying to accomplish is to increase that 8 million units. And I think that's possible, but, uh, I don't think that, that this is going to be on, taking an account in Mexico production. Probably it's going to take account or it's going to gain market share production in the U.S. against other suppliers because you have to put that every car that is exported from Mexico to the U.S. at least has between 35 and 45 U.S. content. So in the interest of everybody, if you're going to produce more in the U.S., You have to substitute imports of cars from outside the region and not from Mexico. So that's the vision I think everybody is looking to. I hope I did answer the question, Alex.

Yeah, no, it's very clear and it makes sense. I guess a second question would just be, you know, I've seen various news reports about Mexico increasing their own steel tariffs. I guess what is the current proposal, and what would be the timing of implementing any changes? Thanks.

There are several initiatives in Mexico that are following, in a sense, also what the U.S., not because the U.S. is asking, I think, but because this was a clear vision of this new administration. I think the new president, before she was even elected and when she was already elected but not in office, said that the vision of the Plan Mexico was to increase value-added content in Mexico and in the region. So there's a lot of initiatives. There's one initiative that I said, I think, in my initial remarks, that there are almost 1,500 products that are ready in Congress to increase tariffs. Those include those of steel and some steel derivatives. from 25% to 35%. This should be approved in November. And there are also other initiatives, I know they're discussing, to try to limit imports whenever it's possible to produce that in the region, that's in the North American region.

Okay, thanks. And then I guess just one final one, if I may. I mean, I assume that titanium would generally produce be in favor of sort of creating fortress North America for steel where, you know, Mexico, Canada, the U S have steel import policies, a tariff policies that are fairly aligned with each other, but then, you know, relatively free trade amongst each other. I assume that's something that Cernium would generally be in favor of and would be quite positive for Cernium.

Yes. And I have been, uh, outpoken about that. So yes, I can say without any doubt, I think that each country has to have some differences because the production matrix of the countries are different. But I think it's early to say that we are in favor of a North American fortress, and we are actively asking for that.

Okay, thanks.

Best of luck with everything. You're welcome, Alex.

Your next question comes from the line of Rafael Barcellos of Bradesco BBI. Please go ahead.

Hey, good morning. Thanks for taking my questions. So first question, outside of over the past few years, you work to simplify the overall shareholder structure of your subsidiaries, right? So I just wanted to understand how comfortable you are with the current structure across regions. And the second question, if you could provide an update of the Pescaria project. I mean, if you can go through, you know, the expected startup capex. I mean, after the recent capex revision, whether you are now comfortable with your estimate. And given the overall market conditions, if there's any change in your commercial strategy for the project. Thank you.

Thank you, Rafael. I'll start with the second one, Pesqueria. I mean, you know, the Pesqueria has several projects. The first one, the first part is the galvanized, the new galvanized line and the new PLTCM, the cold rolling mill. The galvanized line is going to start the running corp in December. It's in time. We are going to start it in December. And the PLTCM is going to start it in January. Remember, this has They're very complicated lines, so the ramp-up curve is not short, but we are going to start production in December, and we are going to start production in January, plus minus some days. And so, I mean, we are confident of that. The other project is the DRI and the EIF facility. That is going on time. I mean, we have on our budget that it's going to start in the fourth quarter of 2026. If you see the site, I mean, it's impressive. It's really worthwhile going to visit the site because it's clearly amazing, and the tower and 140 meters of the DRI facility going direct to the EIF without any, I mean, hot DRIs, so we have a lot of efficiency in energy. And today we have the same budget as we announced. I think it was $2.7 billion. We are in that budget. Of course, it's still one year until we start the production. But so far, it's going very good. And then we have the structure. Pablo. Yeah.

How are you? You know that we have been discussing this at length during many conference calls on our idea to simplify the corporate structure. So clearly we are not comfortable with the structure that we currently have. We think would be a plus for planning to simplify corporate structure. But also, you know, that is not a simple proposition. It's not just a decision that from one day to the other we can achieve. So we need to be very cautious on the message that we pass that clearly we have a comfortable, clearly something that at some point we would like to have simplified, but the process to do that is not straightforward. We will analyze and we will continue to analyze, not only from an economic standpoint, but also from a formal standpoint, how we can achieve that. But again, I guess that we answer this question also from our point of view during this call. It's something that we keep in our short list of things to be done in the future. Nothing that we can do at this specific point, but it's something that we will try at some point to achieve. Okay. Thank you very much.

Thank you, Rafael.

Once again, ladies and gentlemen, to ask a question, please press star 1 on your telephone keypad. Your next question will come from the line of Tatian Candini of JP Morgan. Please go ahead.

Good morning everyone. Thank you for having my questions. So I would just like to follow up a little bit on the questions that my colleagues did. And the first one is a little bit about your expectations for 26. So I think there is like the magical number of EBITDA per ton that we always discuss, $150 per ton. And I would just like to understand if this is your expectations for next year? If not, what is the level that you guys have confident that you might deliver? And what is the premises that you have been considering for this number? So does this include like anti-dumping structures for Brazil, or this is like base case that we are not going to have anything at Usamina's level? So just to understand a little bit your rationale here. And I think, lastly, we discussed, like, every earnings call a little bit on what is the update or the most recent update on Compactus if this is going to be, like, a project that you have on your pipelines for Uzi Minas for coming year. I think the last update that we had is this is going to be a discuss for 2026, but I would just like to understand if there is a space or room for maybe a postponement since, like, we don't have the best environment right now in the market. or if this is a priority since it's an iron ore mining project. So thank you for having my questions.

Thank you, Tatiana. I'll start with the compactors. As I think I said before in some of the conference, I mean, the decision of the compactors, we don't have to take a decision and deal next year. I think it was mid or late next year. In the meantime, we are working on all the alternatives. and we are asking the environmental permissions, and we are going through the analysis of the project. There are several alternatives now for the compactos. So we are analyzing the different alternatives. In the meantime, we are doing some work in MUSA, where we are extending a little bit the life of all the non-compactos that interfere. So we have some more work to do or more time in feeding Usiminas and selling the rest to the market. So, I mean, again, we are analyzing different options, different plant structure for the compactos. a different way of taking the iron ore out of the mine. And probably we have an update by mid-2026. The first one, Pablo, the EBITDA ratio.

Yes, how are you? So, you know, you're right that this has been our target. And in fact, we have been above this number for a very long period of time. after the increase of our participation in Ximena, we mentioned that then you need to sum up both things. And if you take into consideration what Ximena commented last week in their own conference call, the margin that they presented was 7%. And if you take the margin that I mentioned in answering the previous question of our operations in Argentina and Mexico, we are without Yusiminas closer to 12% EDA margin, clearly is something that we need to keep working. We already comment that we are expecting to increase our margins marginally or some during the rest of this year, 2025. And also Yusiminas mentioned exactly the same. So, of course, we will not arrive to this number during the rest of this year, meaning the fourth quarter of 2025. It will depend on many different things, the possibility of reaching that number during 2026. You mentioned some of them, the tariff, some reduction of imports in Brazil, improvements. On our side, we are doing a lot of things. We are fully implementing our cost reduction plans in order to sustain reduction of our own costs. But at the very end also will depend on the scenario, on the trade negotiations, the growth in the different markets where we are. It's very difficult for us, especially with uncertainty related to the trade discussions, to put a number today to 2026 EVDA margins. Clearly, we continue to have this as a goal. Clearly, it's something that we will pursue. We are improving. We are entering into 2026 with a margin of about 10%. Last one was 11%. And we will continue to work on to the direction. So we are not that far for that goal. Clearly is one target that we have. And we will keep working to achieve as much as we can during the rest of 2026. Thank you, guys. Thank you.

There are no further questions at this time. And with that, I will turn the call back to Ternium CEO. Please go ahead.

Okay. Thank you to all of you for participating in today's call. We really appreciate your insight and encourage you to share any feedback. And have a great day. See you in three months.

Ladies and gentlemen, this concludes today's call. We thank you for participating. You may now disconnect.